Malaysian sovereign wealth fund Khazanah Nasional has released a 12-point restructuring plan aimed at redeveloping Malaysian Airlines and eventually returning it to profitability.
The restructuring plan centres around delisting the airline and creating a new company with a competitive operational structure and workforce. This will be achieved through staggered injections of MYR6bn ($976.7 million) from the majority shareholder over a three-year period.
Khazanah stated it intends to delist MAS by the end of 2014, and to migrate the relevant operations, assets and liabilities to the new company by 1st July 2015.
During this period, group chief executive Ahmad Jauhari Yahya will continue to lead MAS, as will the board. In the meantime, Khazanah has started the search for a new chief executive, expected to be announced by the end of the year.
Khazanah’s target is for the new company to return to profitability within three years of being taken off Bursa Malaysia. Eventually it has plans to relist the carrier between 2017 and 2019. If such conditions are met, Khazanah would also consider a sell-down or partial sell-down of its stake to appropriate strategic buyers from the private sector.
To fund the restructuring plan, Khazanah will disburse investments amounting to MYR6bn periodically. Delisting MAS is expected to cost some MYR1.4bn, while restructuring and retrenchment costs will require another MYR1.6bn. Over a three-year period starting 2014, MYR3bn will also be progressively injected into the new MAS on a milestone basis.
Khazanah managing director Azman Hj. Mokhtar said: “The combination of measures announced today will enable our national airline to be revived. While funds have been made available, they come with strict conditions, so as to ensure that MAS truly resets its business model and cost structures, in order to be truly sustainable.”
Mokhtar added: “Recent tragic events and ongoing difficulties at MAS have created a perfect storm that is allowing this restructuring to take place. We believe that the 6bn is not a bailout, we believe it will be recovered with re-listing.”
Khazanah releases details of MAS restructuring
